Ad Network vs Ad Exchange – are they different and why?

Nowadays advertising and marketing is full of thousands of notions, that newcomers are may feel ill at ease. One of the most popular misconception is about advertising networks (ad networks) and ad exchanges.

The biggest problem is that their roles are seemingly equal. But is it really so? Adsmediabrokers is going to clarify the issue once and forever.

Let’s start with the beginning.

At the dawn of time

People used to get information from radio, television, newspapers and other traditional means of mass media. Everything changed when Internet was invented. People started spending online all the free time they could. Marketers put two and two together quite quickly and adjoined the place of major activities.

Direct advertising was one of the first attempts to promote one’s business. It was not so much convenient and, to tell the truth, quite time-consuming. There were two big problems:

impossibility to apply necessary changes for an advertiser immediately;

low coverage of the audience.

When we talk about publishers like Forbes or Daily Mirror – this issue is not so important. But they were definitely to ask high prices not possible for small firms and local companies.

If your niche and audience is too specific and unusual – direct advertising will certainly suit. But, let’s face the truth – it is not an often case.

Sooner or later, somebody has decided to create a unique place where advertisers and publishers could gather to sell and buy advertising places. Thus, ad networks were created.

Ad networks offered solutions suitable for all participants: just register, define your role, be verified, set the parameters and enjoy the process.

The point about networks is that both parties can choose which sources can be used for publishing or which ads to accept, accordingly.

However, everything was not so good as it could seem from the first sight.

First of all, ad networks charge commission for their services – it means that advertising is still expensive for small brands.

Next point is about fraud. Unfortunately, it could come from all the participants of triangle.

The most important problem was about the audience. Publishers generally give information about their audience including the following data like: location, popular devices, age, interests and some others. Advertisers could rely on the idea that desirable audience is likely to be there, but it was not always so…

Personalization as a new focus of work

Yes, right you are, even advertising can be personalized. And here we come to the notion of Ad Exchange.

This idea refers to programmatic RTB approach. To say it simply, the approach works like an auction where a particular impression is a lot.

Ad exchange is a platform that supplies bidding of ad displays. Its task is to put displays for sale to advertisers that can be represented by ad networks and platforms and individual companies as well. Exchange gets information from Demand Side Platform and announces the winner that will show his ad to a user. All the process takes only that mere seconds that are necessary for page loading.

There are a lot of benefits from the trend. Let’s have a look at the most vivid.

Absolute transparency. Advertisers can easily track when and to which person the ad was shown.

Openness for everyone. Even small websites and blogs with 500 – 600 unique users can participate. The focus on the traffic you can offer is very detailed.

Financial side. It is a perfect example of win-win strategy, where advertisers spend less as they don’t have to pay commission and publishers also get all the income they earned. Sometimes the bets are so high, that no advertising network is ready to offer such pricing.

Some words about programmatic

It becomes a bad habbit to understand programmatic RTB as the only variant of new form of advertising. However, programmatic just an ecosystem.

Ads can be obtained without auction model, when publisher and advertiser directly arrange the pricing and time for ad publishing. Programmatic in this case is used for closing a transaction and is called programmatic direct.

To sum up

As you can see, both of the instances perform almost the same function. The point is about the technology we use or don’t for performing the business.